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    Question

    The process where a securities transaction is matched,

    confirmed, and settled through a central counterparty is primarily handled by:
    A Stock Exchange Correct Answer Incorrect Answer
    B Depository Correct Answer Incorrect Answer
    C Clearing Corporation Correct Answer Incorrect Answer
    D Credit Rating Agency Correct Answer Incorrect Answer
    E Primary Dealer Correct Answer Incorrect Answer

    Solution

    A Clearing Corporation (or Clearing House) acts as the central counterparty (CCP) between buyers and sellers after a trade is executed on an exchange. It ensures settlement by novation (becoming the buyer to every seller and seller to every buyer), manages risk through margins, and guarantees the trade.

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